A Case to Watch? «

A Case to Watch?

Workers’ compensation is a mandatory form of business insurance. Employers are required to pay premiums either into a state fund or through a private insurer. Workers’ compensation coverage extends to injured employees – it is a bargain of sorts. Employees give up a right to sue employers for injuries on the job in return for a compensation system supported by employer premium payments.

Each system differs from state to state. Some are well-funded, well-managed, state systems. Some statutory schemes have failed. But, however the system exists in a particular state, most employers have required premiums to pay.

The premiums are based on injury history, the type of industry (office workers cost less than roofers), and other factors that vary state to state.

In some states, premium reductions can be achieved by “group” pooling. Employers of a certain size, or in a certain industry, with a period of time in the system, can get a “group” rating that lowers premiums.

In Ohio, that system is being challenged by a group of small employers who allege the system is unconstitutional and violates state law by requiring the smaller non-group rated employers to bear the burden of larger grouped employers through higher premiums. That group filed a lawsuit seeking class action certification for all similarly situated small employers. A judge granted that class certification.

The state appealed that certification. On Thursday, in a case entitled San Allen, Inc., et al. v. Buehrer, an appellate court upheld the court’s certification of the class (decision in .pdf is here). The Ohio Bureau of Workers’ Compensation is considering an appeal to the Ohio Supreme Court.

This is a case to watch. According to the U.S. Small Business Administration, small businesses have created 65% of new jobs over the last 17 years and account for over half of U.S. employment. But, the small employers pay a disproportionate amount to comply with government mandates. Just looking at federal regulations the SBA concluded that small firms spend 36% more than large firms to comply with regulations and three times as much to comply with tax regulations. So these, now class-action, plaintiffs are raising an issue confronting all small employers: “Is my company footing the bill for big employers? Why?”


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